WASHINGTON, Sept 23 (Reuters) - Senior managers at Moody's Corp still favor revenue over ratings quality and are willing to dismiss or silence employees who disagree with them, a former Moody's managing director said in testimony obtained by Reuters on Wednesday.
Eric Kolchinsky, who was recently suspended from Moody's, said the firm's credit policy group is weak and short staffed and its analysts are 'bullied' by managers who override their decisions to generate revenue.
In written testimony for a U.S. House Oversight Committee hearing on Thursday, Kolchinsky said he was suspended by Moody's because of a warning he sent the firm's compliance group about what he believed to be a securities violation at the firm.
Congress and regulators are cracking down on the ratings industry, blamed for exacerbating the financial crisis by assigning top ratings to mortgage-linked securities that later crumbled as home prices fell.
Kolchinsky said Moody's methodologies for rating complex products are inadequate and do not realistically reflect the underlying securities.
Moody's said in a statement that the company 'takes seriously all allegations of potential impropriety' and that the company has a strict non-retaliation policy for employees who raise complaints.
(Reporting by Rachelle Younglai; Editing by Tim Dobbyn) Keywords: MOODYS CONGRESS (rachelle.younglai@thomsonreuters.com; +1 202 898 8411) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Eric Kolchinsky, who was recently suspended from Moody's, said the firm's credit policy group is weak and short staffed and its analysts are 'bullied' by managers who override their decisions to generate revenue.
In written testimony for a U.S. House Oversight Committee hearing on Thursday, Kolchinsky said he was suspended by Moody's because of a warning he sent the firm's compliance group about what he believed to be a securities violation at the firm.
Congress and regulators are cracking down on the ratings industry, blamed for exacerbating the financial crisis by assigning top ratings to mortgage-linked securities that later crumbled as home prices fell.
Kolchinsky said Moody's methodologies for rating complex products are inadequate and do not realistically reflect the underlying securities.
Moody's said in a statement that the company 'takes seriously all allegations of potential impropriety' and that the company has a strict non-retaliation policy for employees who raise complaints.
(Reporting by Rachelle Younglai; Editing by Tim Dobbyn) Keywords: MOODYS CONGRESS (rachelle.younglai@thomsonreuters.com; +1 202 898 8411) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
© 2009 AFX News
